Diamond Resorts Corporation is planning its first timeshare loan securitization of the year totaling $170 million, according to presale reports from Standard & Poor’s and Kroll Bond Rating Agency.
The transaction, called Diamond Resorts Owner Trust (DROT) 2015-1, offers two class of fixed rate notes: $158.5 million of class A notes rated AA-by both S&P and Kroll and $11.5 million of class B notes that have been assigned a preliminary A’ rating.
The class A and B notes benefit from 11.5% and 5% credit enhancement, respectively.
Diamond Resorts last came to market in November 2014 with DROT 2014-1, a $166.8 million timeshare loan securitization. The latest transaction will be Diamond Resort’s sixth securitization since 2009.
DROT 2015-1 has a pool of 7,160 timeshare loans with an average principal balance of $24,732. The loans have an average remaining term of 114 months, and weighted average (WA) seasoning of 6 months. Borrowers in the pool have a high WA FICO score of 735, which is 11 points higher than the WA FICO score of 724 in DROT 2014-1.
Diamond’s underwriting process allows it to approve financing packages based on FICO score, and the company only considers applicants who do not meet the qualifying level on a case-by-case basis. Diamond intends to collect a loan once it becomes 10 days delinquent, and will initiate default processing after 120 days of delinquency. Diamond maintains a FICO score of 758 on loans originated since 2008.
Loans in the pool are most highly concentrated in California (33.43%), Arizona (8.21%), and Florida (4.87%). The latest deal consists of 99.1% of domestic obligors, compared to 95.1% in DROT 2014-1.
Diamond Resorts International, parent company of Diamond Resorts Corp., was founded in 1996 and has a member base of more than 515,000 owners. The company’s affiliated resorts span the continental United States, Hawaii, Mexico, Canada, South America, Europe, Asia, Africa, and Australia.
From 2010 to 2013, Diamond completed six acquisitions, in turn adding 34 resorts and 170,000 owner families to its business. Kroll notes that Diamond has benefited from the integration of the acquired companies into its network, and has since increased its originations on a quarterly basis.
The deal is expected to close July 29.